Business Monitor International


India Business Forecast Report

Published 22 July 2014

  • 55 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
India Business Forecast Report

Core Views

  • The strength of the electoral win by the opposition Bharatiya Janata Party (BJP) at the lower house (Lok Sabha) elections in India surprised many - the party swept 282 seats of the 543-seat parliament, 10 more seats than it needs for a majority. Prime Minister Narendra Modi led his party to victory with a presidential-style campaign never seen before and overcame questions about his Hindu nationalist background. While we, like many others, hold high expectations for Modi's team to deliver on its promises to clear the road blocks obstructing infrastructure projects, we hold a more downbeat outlook on the prospects for the quick liberalisation of sectors such as mining, oil and gas, and insurance.

  • We maintain our above consensus outlook for India's real GDP growth, expecting the return of investor and business confidence to support an economic growth revival in FY2014/15 (April-March). While the pace of recovery will also depend on the timing of monetary easing, we have seen optimistic signs from June manufacturing and services purchasing managers' index readings, indicating that both sectors are in expansion. Our upbeat outlook is reflected in our real GDP growth forecast of 5.6%, which sits above consensus expectations of 5.4%.

  • Although headline inflation has eased somewhat in India, they remain at elevated levels, amongst the highest in the region. Acute food price pressures, as supplies often constrained by logistical inefficiencies and prices, further boosted by minimum support levels dictated by the government, lie at the heart of the problem. Expansionary government policy further exacerbates these pressures. Absent a major reduction in subsidies and minimum support prices for agricultural goods, and together with weaker-than-usual monsoon rains, there is a risk that the Reserve Bank of India (RBI) may be forced to keep interest rates higher for longer in FY2014/15.

  • The Indian rupee remains one of our favourite currencies in the region...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Improving Political Outlook After Historic Win
8
TABLE: POLITICAL OVERVIEW
8
TABLE: New Cabinet
9
Foreign Policy
10
The Global Implications Of Modi's Victory
10
Gradual Reform To Prevail Over The Coming Decade
13
Chapter 2: Economic Outlook
17
SWOT Analysis
17
BMI Economic Risk Ratings
17
Economic Activity
18
Positive Policy Changes Bode Well For Growth
18
TABLE: Economic Activity
18
Fiscal Policy
19
Higher Fiscal Expenditure Poses Inflation Risks
19
TABLE: Fiscal Policy
20
Monetary Policy
21
RBI To Further Banking Reforms
21
TABLE: Monetary Policy
21
Exchange Rate Policy
23
INR: Upside Potential Largely Priced In
23
TABLE: Current Account
23
TABLE: BMI CURRENCY FORECAST
24
Chapter 3: 10-Year Forecast
25
The Indian Economy To 2023
25
Will Indian Growth Live Up To Expectations-
25
TABLE: Long-Term Macroeconomic Forecasts
26
Chapter 4: Business Environment
29
SWOT Analysis
29
BMI Business Environment Risk Ratings
29
Investment Climate
30
Business Environment Outlook
32
Introduction
32
Table: BMI Business And Operation Risk Ratings
32
Institutions
33
Table: BMI Legal Framework Rating
34
Infrastructure
35
Table: Labour Force Quality
35
Table: Top Export Destinations
36
Market Orientation
37
Operational Risk
39
Chapter 5: Key Sectors
41
Pharmaceuticals & Healthcare
41
TABLE: Healthcare Expenditure Trends, Historical Data & Forecasts
42
TABLE: Pharmaceutical Sales, Historical Data & Forecasts
42
TABLE: Government Healthcare Expenditure Trends, Historical Data & Forecasts
43
TABLE: Private Healthcare Expenditure Trends, Historical Data & Forecasts
43
Telecommunications
44
TABLE: Pharmaceutical Trade Data & Forecasts
44
TABLE: Pharmaceutical Trade Data And Forecasts local currency
44
TABLE: Telecoms Sector - Mobile - Historical Data & Forecasts
46
TABLE: Telecoms Sector - Wireline - Historical Data & Forecasts
47
Other Key Sectors
49
Table: Oil & Gas Sector Key Indicators
49
Table: Defence & Security Sector Key Indicators
49
Table: Infrastructure Sector Key Indicators
50
Table: Food & Drink Sector Key Indicators
50
Table: Autos Sector Key Indicators
50
Chapter 6: BMI Global Assumptions
51
Global Outlook
51
Global Recovery Still On Track
51
Table: Global Assumptions
51
Table: Developed States, Real GDP GrowtH, %
52
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
52
Table: Emerging Markets, Real GDP Growth, %
53

The India Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in India and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of India's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of India's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise India's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in India, including currency volatility, the commodity price boom and protectionist policies.

The India Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the India economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for India through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The India Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for India and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on India, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in India over the next 5-years?

BMI's India country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the India Market - Political Strengths, Weaknesses, Opportunities and Threats facing India.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for India's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark India's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for India, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of India's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in India will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in India's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express